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Worldwide Exchange

News/Business. Ross Westgate, Kelly Evans. Ross Westgate and Kelly Evans consider the business stories that have global significance. New.

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U.s. 23, Us 20, China 17, France 10, Athens 9, Bae 8, S&p 8, Angela Merkel 8, Esm 7, Lena 6, Europe 6, Greece 6, Chavez 5, George Osbourne 5, England 5, Britain 5, Uk 5, Kenya 4, Germany 4, Silvia 4,
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  CNBC    Worldwide Exchange    News/Business. Ross Westgate, Kelly Evans. Ross Westgate and  
   Kelly Evans consider the business stories that have global...  

    October 8, 2012
    4:00 - 6:00am EDT  

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. you're watching today's edition of "worldwide exchange." here are the headlines from around the world. world bank slashing it growth outlook for china and asia while warning a major european crisis could bring more pain for the region. george osbourne tells cnbc britain is getting it right when it comes to tackling debt. he's set to announce spending cuts from welfare later. >> one of those western countries getting on top of our debt problems. we have a credible plan to reduce our budget deficit that's delivering very low interest rates for us in the market at the moment. so that is the proof that
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there's international problems. >> the bae/eads merger, largest shareholder opposes the deal saying it would be better left as a stand alone company. and angela merkel's first visit to athens since the eurozone crisis as finance ministers meet today in luxemburg. very good morning to you. a new week on "worldwide exchange." and too late. if you haven't got your application in, it is too late. bank of england government job should have been in half an hour ago. so if you didn't make it, you're not going. jim o'neill wasn't applying, scott mcdonald wasn't applying
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either. i didn't get mine in. so never mind. stick here. also coming up, we'll be heading to new delhi to hear how undoing regulatory requirements could boost investments. details from one of the author of the quarterly cfo survey. and also president chavez is fig celebrating a hard-fought victory. if you have any thoughts, comments, whatever you like, e-mail us worldwide@cnbc.com or tweet @cnbcwex or @rosswestgate. first we'll turn our attention to china. analysts say there is hope the mainland services sector can help offset weakness in the manufacturing side. hsbc also says early easing measures and stronger consumption demand may have
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helped world bank is warning it needs to brace for slow growth. it's their slowest pace since 2001. it's because of the exposure to china which also had its outlook cut. joining uses for more, norman chan. norm, good to see you. the world bank downgrade just seems to be catching up with where everybody else already is. what do you make of that services pmi number? how much do we put into that bearing in mind the weakness we've seen in other surveys? >> yes, i think this is a nice surprise. the weakness in manufacturing and exports are still true, but on the other hand, i think the services numbers shows that the domestic consumption side is doing better than expected.
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and even the pmi numbers from the hsbc is showing that it has rebounded from recent note and that the services sectors is not directed by the manufacturing sector too much. so, yes, in the near term, the domestic economy and the overall gdp numbers will still remain weak in china because of the weakness in manufacturing and exports. but overall, we still think there is a good chance for the chinese economy to rebound in the first half of 2013 and also we expect china to solve the la soft land. >> what is the definition of a soft land in terms of numbers for you? >> well, i would say china would likely retain growth and see the growth number rebound from there in the first half of 2013. more than like 8% or slightly
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above it. >> what does that mean for the chinese stock market? it's been a big under performer. hoard a week off. hasn't been tell already today. so what happens the rest of the fourth quarter with that economic backdrop? >> fourth quarter, first day of the quarter is not doing too well of a taker week long vacation despite strength in the overseas markets. i think that's because the market is still digesting the slowdown in macro numbers as well as slow down in earnings growth. but i will say that the market is above defined bottoms.
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fourth quarter probably first half would remain weak because of the lack of policy. and i think mainland china knows the economy is slowing down, but the imminent means they're constrained by that and not able to announce very substantial policy before that. but after november 8th, i think one month later, after the transition of power, more policy will be able to be announced and we expect export demand situations to stabilize, as well, because of the improving signs in u.s. economy and that will help the china market to fund the bottom and reverse the down trend oig by the second half of the fourth quarter. >> we're looking at this transition towards domestic consumption. the retail sales that we've been looking at as you're suggesting not exactly brilliant either. if you're looking for more
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policy initiatives, what are they going to be and are they going to focus on that retail consumer side? >> the retail consumer side, yes, they will focus on it, but it will not be a quick fix. trying to encourage more retail and more consumptions, you need structural changing wage growth which they are doing, but they can't to it overnight. and also in providing more social securitys. and that's going to take a while. and i will say that the quick fix is more on the investments which they have already announced sizable stimulus in infrastructure spending. of course the largest component of the gdp which is the fai. and that would be short term solution. long run, yes, they are also working on the retailer is services consumptions.
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but that will take a while. in the meantime, the f achlfai best to turn it around. >> all right. more to come from you. protesters have taken to the streets across spain. saying unless the government holds a referendum on the budget cuts, they will call a nationwide general strike in november. last month rajoy unveiled 13 billion euros in fresh austerity measures. more protests also expected in athens storm when angela merkel arrives for her first state visit in three years. it comes after another weekend of failed talks between the troica and the greek government on the cuts required to release the next tranche of bailout money. speaking to german tv, the finance minister schaeuble says it's not a sure sign aid would be received. and silvia is in luxemburg.
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so what can we expect on this never ending magical mystery tour that is the eurozone debt crisis and policy making, what is the stop we're at today? sgrt ca >> the caravan moves on, make haste, make haste. first it's a meeting of the esm. we've waited for that long enough. so the esm as of tonight should be operational. that of course is the first little duck that needs to get in the proverbial row before other things can fall into place. thousand the ball is back in madrid. will or will not spain come up with some kind of a bailout. they don't quite call a bailout. i think that's the conundrum at
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the moment. what's happening then. aid dispensing, bond buying in the primary market and the more interesting bit, the ebc told us last week we're ready with our omt program, we can act now. it's you the politicians that need to get your act together. so that's the next step. we will also listen to the latest interim report of the troica on greece. what we've heard out of athens progress has been made, but no agreement, so we might hear a little bit about greece. and of course they look at the report about banking supervision and banking unions. so they have plenty on their plate. but in terms of results, i think the esm is the best we can hope for and that would of course be an important step at least. >> all right, silvia, you'll join us again in about 20 minutes or so, so we'll see you for that. meanwhile we're just over an hour and 20 10 minutes in to the trading day and we're pretty
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much weighted to the down sides after gains last week. only about 30 odd stocks that are in positive territory. positive if you're long in the markets. those of you who are short, that wouldn't be so positive. ftse 150 up 2.25% last week. currently down 0.75%. xetra dax up 2% last week. currently down 1.4%. the contact 340 laac 40 last we, ibex down 1.07%. we were below 6% with spain on friday. similar levels. we also have these interesting statistics, u.s. fund managers have been buying spanish debt ever since draghi came out with the omt plan. ten year customer pretty much at that 5% yield mark. ten year bonds 1.47%. we will change the treasuries to
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gilts because of the holiday today. currency markets, and you are row dollar, 1.2971. we were at 1.30 on friday. so not big changes since then. dollar-yen still 78 ham. aussie dollar, 1.0164. and sterling-dollar, 1.6084. good news for kelly, she'll be back tomorrow as she brings fresh greenbacks into the country, she'll want to see 2tht exchange rate coming down. let's go to asia. >> thank you, ross. asian bourses retreated as investors hunkered down ahead of europe's meetings. september china services pmi surprised to the up side, but that didn't help the stock market. shanghai composite finished in the red after a week long holiday. some investors fear the revival
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of ipo approofts could further dilute liquidity. following the mainland's weakness, shares in hong kong ended five sessions of fwans. hsbc hong kong pmi dipped to a four month low. t fox con shares lost despite saying iphone 5 production is on track. japanese markets are closed for the holiday, but the kospi lost 0.7%. steel makers losses after pk telecom sold off a stake in the company. ship builders and financials also underperformed. australian shares snapped a seven day winning streak. utilities and i.t. showed weakness. sensex currently trading lower by almost 1%.
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back to you. >> okay. catch you you later. thanks. shares at zte are tumbling in hong kong, but not in shanghai, after recorrecting u.s. allegations that it's under beijing's influence. a congressional committee is set to recommend blocking equipment makers from expanding in american markets. a leaked draft report suts that zte post u.s. security risks. the full report set to be released at 10:00 eastern time today. the move comes as a public offering is considered. they refute the allegations. hopefully norman you know which company i'm talking about. if you're an investor in chinese stocks, we're getting reports that power companies and service companies are becoming targets for short sellers because of the political story and now the political story is also also impacting on these stocks, as well. what do you do?
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>> lean companies in china have political connections and that's necessary to be successful in china. and the question is how independent would it remain. in the case of the tele company equipment providers, it's probably not that sound and difficult not to suspect that the intentions of those companies are more on competition issues and there has to be antitrust accusations on those two companies before and now they're trading at different angles. i think if they can supply on your network, it's up to find those spying hardware.
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so i will say probably more political. >> so just away from that sector, where can you stop it, you can find companies that are outperforming are and if so where? >> yes, of course. many fund managers we talk to don't look at the market too much. china market is very broad market and very deep market now a days and their index is dominated by financial events, properties, instruments, maybe oil companies or telecom companies. but underneath that, you have a lot of big cap companies available to choose from and of course to the funds, despite lack of performance in the china index, many china funds are up around 10% or even more.
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so i would say there is still hidden fwems to be found. >> norman, thanks for that. >> sure. up next, if you wanted to apply for the position as governor of the bank of england, sorry. too late. the deadline passed about an hour and 20 minutes ago. but we'll look at some of the candidates or at least those who have said that they haven't not applied.
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the deadline passed about an
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applications for the top job have officially closed. the first time central bank as openly advertised the vacancy for the governor. mervyn king stepping down after ten years in the job. who are the most likely candidates? we have two of them here because mr. o'donnell has just ruled himself out. but the fsa turner currently there are concerns that his appointment may lead to a difficult working relationship with the sector. and paul tucker has been sort of the arguably most experienced, but the libor rate scandal may have dentsed his chances. and gus o'donnell has been writing in the pt today and over
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the weekend, he says he has other priorities to focus on. the final decision made by the prime minister and the chancellor. but he did say what was really important that whoever is there is able to coordinate both monetary and fiscal policy. very important that the chancellor, whoever the chancellor, is able to work with the treasury as well as the governor -- sorry, the governor can work with the treasury and the chancellor. who do you think should be the next bank of england governor and what should be their top priority? join me in the conversation. e-mail or tweet. tom says how about simon cowell because he seems to be running everything else. what do you think? let us know. meanwhile, talking about the chancellor, george osbourne expected to announce further austerity measures at the conservative party conference today. beccy meehan has been at that conference and she caught up with george osbourne and asked him if more austerity would
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impress the financial markets. >> what they'll see is a country attacking its problems head on. we're one of those western countries getting on top of debt problems. we have an incredible plan to reduce their budget deficit delivering very low interest rates for you us in the markets at the moment. and so that is the proof that there are international parliaments in the plan, but what i'm saying is we have to stick with the plan and setting out new ideas for example in our welfare system to make sure this country continues to live within its means and at the same time has a tax system that attracts international businesses to britain p. and one of the encouraging stories is 20 of the largest companies are moving some of their head quarters to the uk. >> but low yields aren't giving us growth. >> all western countries are facing the issue of how they pay their way in the world and how they grow. if you look at the uk, a million jobs in the private sector over the last couple of years and
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we'll go on making reforms to our tax system to make this the competitive place to come and do business. >> meanwhile britain's largest businesses are adopting more defensive strategies. this is one of the latest findings of the deloitte cfo service. they were asked what their views are on the current operating environment. joining us with more, chief economist at deloitte. good to see you. i suppose we had a record second quarter of declines. >> confidence went through the floor back in june on the result of what's going on in the euro area. you've seen a bit of a bounce. risk appetite up is bit so i think cfos are looking at the same things the equity markets are looking at, qe-3 in the states, ecb bond buying.
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but the interesting thing is the underlying stock support is getting rather more defensive, they're more focused on cash. if respect. >> so what can he can to in terms of laying confidence?f re >> so what can he can to in terms of laying confidence?espe >> so what can he can to in terms of laying confidence?ct. >> so what can he can to in terms of laying confidence?. >> so what can he can to in terms of laying confidence? >> so what can he can to in terms of laying confidence? >> a lot of concerns relate to things outside the uk, in particular the weakness of the euro area, uncertainty. so there are things the government can do and many things they have done, but i think a lot of what's going on relates to can earns about europe. we still have getting on for a third of cfos expect the single currency to break out within the next 12 months. there's a perception that the economic environment is very uncertain, and that clearly is weighing on willingness to
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invest and expand. >> instead of chief financial officer, should be chief folk officer. can't see their way through. is that the problem? >> i think they see an environment which is where there are a lot of uncertainties and risks. corporates have pretty good balance sheets, high cash balances. for big companies, they have good access to credit. they're keying on corporate bonds. so the interesting thing is whether they can find new sources of revenue. >> what is their view now about sitting on cash and whether it's burning a hole in their pocket or not, nulhobe soinmettttttttg itit wh ???it t t>>sinteresting questions, a backs or dividend payments or they want to expand or whether they believe that actually an environment of elevated risk, you just run permanently high cash balances. for now, there seems to be a big emphasis on building up cash and
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that actually is a top priority over the next 12 months for the cfos. >> do you think that is sort of a structural shift in that? >> i think there's logic in the idea that if the world is more uncertain, you won't have a stronger balance sheet, you won't have less leverage, you won't have have more cash, more liquidity. i think the interesting idea, though, is that we're in a world of very low yields, corporates have the potential to expand. they're very keen on growth outside europe. state, japan, other parts of the industrialized world. they're very bullish actually on their own products and prospects for selling their own products. so i think the interesting thing is whether they can decouple their strategy from a macro xhim story of weakness to find growth. of course the story in the corporate sector the last two or three years is it's done very
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well collectively. >> good to see you. thanks so much for coming in. still to come on the show, protests are expected on the streets as athens again tomorrow. this is when the german chancellor angela merkel arrives for her first visit in three years. against that back drop p of course, the euro finance ministers meeting today, first meeting of the esm, and where are we with spain and that bailout question and are investors actually buying spanish at the time. reports suggest in america they are.
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these are the headlines. world bank slashes it growth outlooks while warning a major european crisis could bring more pain to the region. george osbourne tells cnbc the uk is getting it right when it comes to tackling debt. he's set to announce as much as 10 billion bounds in spending cuts later. >> one of those western countries getting on top of our debt problems. we have a credible plan that's delivering very low interest rates for us in the markets at
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the moment. so that is the fruit that there's international confidence in our plan. >> and bae and eads on a knife edge. largest shareholder says it opposes the deal saying the defense giant would beler left as a stand alone company. plus angela merkel could be facing a difficult reception in athens this week, her first visit since the crisis started. european finance ministers meet take in luxemburg. we're an hour half into the trading day in europe. european stocks suffering a little bit after gains last week. the ftse 100 down 0.8%, up 2.25% last week. cac is down 1.3%. eye beibex down 1.2. yields still okay. 5.7%. italian yields just above that 5
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3rs mark. on the currency markets, euro-dollar just below 1.30 at the moment. sterling-dollar coming back down towards the 1.60 mark. bae's biggest shareholder has said it has significant reservations about a tie up. it cites concerns the merger could weaken the division. in an interview with the bbc, hammond said britain will block the deal if the french or german governments have too much of a controlling sake in the new firm. joining us for more is patricia and stefane. representing between the three of us, we have all the government angles covered right now. coming into this weekend, seemed
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the stumbling block was the german government. >> a lot of pointing the fingers going on because the germans are saying we just want what the french want, we want to have the same sort of stake involvement from the government side as the french, which would be around about 9%. that seems to be the magic number at the moment. but what i thought was very interesting, we are now having more and more major shareholders in eads voicing their concerns. we had daimler talking about the value of the deal perhaps not representing what eads should be all about or even the merged entity should be all about. and now we have investco talking. the other side of the issue, how much involvement into commercial company is conducive to long term strategy. sing
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synergies and big projects. so this may make it a success or of course a failure that governments say we will hold a stake which won't give us blocking minority, but which will give us a guarantee that we are definitely okay when it comes to takeovers and strategic issue which is are strategically important especially on a national level. and i think this is what it's all about. we have another two days until that deadline that was set by eads has been hit. we heard from tom enders the ceo saying it wouldn't be very good for the image of the entire merger or even eads to postpone that deadline. but that verdict of course still out here. >> yes, well, shareholders here are saying we should postpone the deadline. stefane, you're in paris. are people there lessor more optimistic that we'll actually get some deal done?
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>> yeah, but it will take some time and the view really this morning in the french newspaper is that the deadline will be extended since france, germany and united kingdom didn't manage to reach an agreement. you can't expect from a socialist government in france to give up its influence in such a huge giant like eads. what nicolas sarkozy would not accept, hollande definitely will not accept, france will not lose its power in eads. probably why the deal can't be sealed at this stage. two issues. the first is the golden share that france, germany and united king tomorrow would get. french government has no issue with this golden share, but the problem is about this 10% stake, the limit of 10% for a stake
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that uk would like to implement. france has a 15% stake in eads, it would have 9% of the new defense guy achbt, but what if the french group which has a 7.5% stake in eads, roughly 4% of the next company, which will if he decide in the future to withdraw itself from the defense giant. then france and the government would like to buy this stake. but if there is a limit of 10%, it won't be pobl. so in that case, france would be blocked. that's why the reason the government doesn't want to sign anything now which would jeopardize the future of its stake in eads. and that's the main problem from the french perspective. >> all right. what do you think, do you think we'll resolve it? stefane, if you were a betting man. >> it took years for french and
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german people to work together in eads and it was assigns very difficult. sorry for patricia, but it was very difficult to work together because of course there are national influences. if you want a couple to become a threesome, it will be difficult at least at the beginning. and i'm not sure that a couple of extended weeks we could have to reach a deal would be enough to make it work at least on the political side. >> do you think we'll pull off a threesome, i guess paris would be the place to do it. but we'll see what happens. unfortunately patricia's gone, so we've lost her. never mind. but we'll get her back. stefane, for now, thanks very much for that. now, over in india, they're due to announce the creation of a new body called the national investment board. nib meant to push forward hundreds projects that have stalled. the new board would hold no power over local projects in
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individual states. ekta has more details. >> it is definitely a positive and it has come in terms of the big line of reforms that we've seen in the past two weeks which had been initiated by the government. national investment board could get cabinet approval this week or could get some amount of approval. the big reason why the national investment board could actually come into play is that currently it would actually fast track infrastructure approval simply because currently there are 19 ministries overall from engineering to defense which actually require to give regulatory approval to any sort of infrastructure project that
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exists or wants to come into play. so to give it a certain amount of time frame which is more applicable and which is more realistic in terms of infrastructure project is the reason why national investment board could be coming up by the cabinet, but the people are not really seeing it as a fantasy of one because it will take a lot of regulatory approvals to get the national investment board on track and secondly, there could be more state approvals which would be required, where it is more of the state specific issue as opposed to a national issue or as opposed to a central issue. so this could be another reason where the national investment board, though disagreed con seventh, couconcept, could not seat light of day because will could be state hurdles. but a definite positive coming in in line with the reform initiative that we've seen from the government in the past couple of weeks. back to you. >>ekta, thanks for that.
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silvia is in lum ex-burg l. they formally launch it today. then what happens? >> that's the big question mark. the ball is in the court of spain. everybody saying when is this application going to come and what will it look like that is a bailout but doesn't quite have the word bailout written on it. because spain of course wants to -- needs to get money, wants to get money, but also wants to keep something that's called a troica or that looks similar out of of the country and doesn't want to hash conditions, we're back to conditionality, for economic reform programs in
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order to get access to the funds. even if we have an application by spain to the esm, it's not over. it's not automatic that they get the money. they will, i dare say, but then we need another unanimous decision by the euro group and then the event sm can start dispensing money. and then of course we can have bond buying in the primary and then omt in the secondary market. so in a way today is just sort of the start up to some sort of marathon race that we could be seeing. >> lena, when do we fire the starting -- when does spain fire the starts pistol in. >> there are reasons for optimism, but also pessimism, as well. on the positive side, internal sources in europe suggest that i think it's just a matter of formality when spain applies for funds that they're going to get
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it. i think that it's just in terms of conditionality -- >> yields, though, at the moment -- we've got reports that u.s. fund managers have now been buying spanish debt since the omt announcement. yields are lower. we're below 6%. so spain probably sit there and go we've got catalonia sort of referendum, they could say we're okay. people are buying our debt. we can manage this for a little bit longer. >> it is a time game. spain sun der tis under the she the political belt and i think it's just a matter of time before spain comes into it. on the point that you raise, a lot of people came to the dining table late. a lot of people started buy manage to spain a bit too late. i think spain was a strong buy when the omt was announced.
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there are important limitations to what the ecb can do. i think a lot of people have interpreted what draghi has actually said. the ecb will not be a replacement mechanism for the political dialogue and certainly not for free markets. it's politicses that really matter with spain because spain is fundamentally solvent. so on the positive side, a lot of people want to see spain come to the table because they will get nominal conditionality return. it's not going to be anything like the problems that we've had already. on the negative side, i think spain will resist for as long as possible because of the politics. the trouble with this is that this is what mario draghi's leading too, as well, the whole combination of the european firewall of managing the crisis has got a negative stigma to it. if the omts is going to be the symbolic umbrellas representing
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a single sense of unity, this cannot happen by penalizing some members and transferring sovereignty visibly to others. it has to be joint sovereignty. it has to be a joint program. and i think that spain feels a little bit low ball here. >> silvia. >> lena, isn't that the old game that we've been playing, that politicians sadly want to hold out as long as possible which means we always get very close to the danger zone. and by the time they actually apply for bailout, it's become so expensive for everybody and the markets are so doubtful that it works that it costs more and more. is that something we can get away from somehow? >> that's a brilliant question. and you always put it right by the way. throughout it ththis crisis, yo always been right. the important thing is to have a
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stronger, much more level dialogue between the north and the south. what has been surprising for me is how difficult it has been for germany to extract concessions from countries that need to implement reforms. with spain, it's really about the quality of the tone of the conversation because spain for political reasons has made it very clear and has wanted to be seen to managing its own economic future, to be controlling its own process of reform. in other words, rajoy's message is spain's economic policies is in madrid, not brussels or frankfurt. but until there is that political agreement, neither the ecb can get involved nor can spain really indefinitely control its market rates. because it's just a matter of time before the markets start refrising the risk of convergence that they so readily priced in to the last couple months. >> rajoy hasn't read the fiscal compact then if he says economic
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policy and budget control should remain in madrid and not in brussels. isn't that exactly what we're heading towards, more budget coordination, more say of brussels or the rest of the whole eurozone in monetary -- in fiscal decisions, et cetera? i think it's one of those things that you say we want your money, but don't interfere. this is not what more europe is supposed to be about, is it? >> well, it has to be a european union. it cannot be a german european union. the politics of this negotiation seem to be suggesting that there are some companies that need to be penalized. they need to ask for help as a way of bridging the credibility gap. i think this is where clearly spain is going to struggle to come to terms. they also have the technical details. because behind the scenes, there's a lot of technical discussion about how the german
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government debt in spain will be treated, how spain will manage its legacy assets in the banking union. draghi made an interesting comment at the press conference last week and that was just what exactly is legacy assets. these technicalities will probably be the little bits that have to be worked through before a space saving political exercise of unity can be exercised with spain asking for help. >> we've made some steps. and i think, lena, you said silvia always gets it right. that may be true, but that's like saying i always get it right. i don't need anymore buttering up, do we is this we're confident enough. so don't say that again. even if it is true. silvia, thanks for that. we'll catch you a little bit later. lena sticks around for a little more. now, over in venezuela, hugo chavez has been reelected in the lowest race of his newly 14
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years in office. kerry sanders has sent us this report from caracas. >> reporter: streets here are filled with those who are celebrating the success of hugh go chavez's unprecedented third victory as president of this country. very strong message say those here that he will continue their dream of continued socialism. a program of using the oil profits to make life better especially for the poor, not only in will country being but throughout latin america. there are those who lost tonight, those who assumed the opposition. who say that they now fear there is no future for this country. they plan to leave for the united states. but for those who are here tonight, those celebrating, they say the future is with them and
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they anticipate nothing but good. kerry sanders, nbc news, caracas. >> and we'll talk more about venezuela on the show. also another install the of our trade link series. this week a look at the growing demand for data analysis on developing countries.
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in what kind of mission are people looking for? >> typically for demand, the
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level citizen consumer data, but more increasingly for national studies. so national sound posts. interestingly in most african countries, vast majority live outside surban areas and data hs been limited limiting the research. >> talk about how you do that research. >> it's extremely difficult. it's difficult for security reasons, for logistical reasons, for cost reasons. and we typically partner with local research organizations, sometimes commercial, sometimes not for profit, sometimes academic, but the key emphasis is on gathering quality data. because there is so much data out there that's not rely only, that's not generalizable. so the work is difficult and complex and often expensive which is why we're increasingly encouraging clients to work
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together. #. >> what's driving the desire for information? >> increasingly both government and nongovernmental sector and also in the foundation sector, there's including influence on on return of investment. donor, foundations want to understand that their work is having an impact. so a huge emphasis on capturing that impact. and there's another trend where not only is that impact expected to be a financial return on investment, but also social return, as well. making the work in many ways much more challenging. >> what countries have you shown in some ways the greatest return on investment for some of these
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organizations? >> kenya is a great example. a lot of work being done in kenya, a lot of donor and foundation and private sector. kenya stands out as the one that has made huge advances right across the sector. >> and are there lessons there, why is that kenya -- what is it that other countries can learn? >> it seems the characteristic that stands out is when there are long alliances between the private sector and government sector and also with the foundation sector. so that these entities are no longer working in silo, but much more closely together. because essentially it's increasingly been seen as a win/win situation for these traditionally silo sectors to work more closely together. >> there a lesson in terms of the international aid community, as well? there's been such focus on whether all the international aid has helped or hurt some of
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these economies in africa. >> again the international development sector itself, there is an increasing engagement for the private sector and this washington understanding that there is a lot to be learned from working more closely with the private sector. so i see that shift in multiple ways. >> and just a reminder about our trade link series, every week we look at how financial crisis is affecting global trade and impact on how do you business. it's every monday 10:50 cet. tradelinks.cnbc.com. and reminder of what's on the agenda in asia, we'll be on the ground in tokyo at the start of the imf world bank meeting. en route to tokyo, timothy geithner and ben bernanke, expected to make a stop over in new delhi. and outside of that top taiwanese tech companies compile umc, tmsc and au electronics all
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posting september sales figures. that's all coming up tomorrow. but still to come on today's program, we get into the second hour. last week's u.s. job figures are still causing controversy. we'll find out why. and it's all about that unemployment rate coming down to 7.8%, a 3 1/2 year low.
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here are the headlines from around the world. world bank slashes its growth outlooks for china and developing asia and warns there could be a more pain to the region. george osbourne tells cnbc the uk is getting it right in tackling debt and he's set to announce as much as another 10 billion pounds in welfare spending cuts later. >> we're one of those western countries getting on top of our debt problems. we have a credible plan to reduce our budget deficit. that's delivering very low interest rates for us in the markets at the moment. so that is the proof that there's international confidence
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in our plan. >> bae and eads merger, bigger shareholder says it opposes the deal saying the defense giant would be better left as a stand alone company. and angela merkel faces a difficult reception in ath thens this week, her fist advirst vis greece since the eurozone cry city started. very good morning to you state side especially as we start the new trading week here. columbus day holiday. government closed in the states. the dow trading some 39 points below fair value. not a bad week, up 1.25%. a little more for the dow last week. nasdaq last week was up 0.6%. currently it's indicate $11 1/2
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points below fair value. and s&p 500 is some 4.8 below value. so indicated for a negative start this morning. pretty good gains for european stocks. better than u.s. stocks last week. but the ftse global 300 this morning down. two-thirds. xetra dax today down 1.2%. ibex down a percent. spanish yields still contained. 5.68% is where we stand right now in spanish yields. so continue to fall further below the 6% mark. italian yields just over the 5% mark, as well. and currency markets, euro-dollar a little bet of weakness, back below 1.30, levels we were trading before the employment report last friday. aussie dollar down to below
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1.02. what about in asia? >> asian markets kicked off in the red. shanghai composite finished lower after the week long holiday. smin investors fear the revival of ipo approvals could further dilute liquidity. housing sales reportedly slumped during the golden week. shares in hong kong followed suit. zte shares gained 2.6% on the divorce. a dropped congress report says regulators should block telecom gear makers.
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foxconn lost ground despite saying iphone 5 protection is on track. japanese markets are closed for the sports day holliday, but south korean kospi lost 0.7%. utilities and i.t. firms weighed. sensex currently lower by 1%. back to you. >> thanks for that. the latest out of asia. we have other stories just developing right now. natural gas flow from iran to turkey has been halted because of an extplosion in eastern turkey.
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friday's u.s. jobs report is still sparking debate. nonfarm payrolls were up by 114,000, slightly lower than forecast, but the unemployment rate fell to 7.8%, the first time it's been below the 8% threshold in nearly four years. doesn't seem even though is buying that figure. especially jack welsh, former ge chairman took to twitter on friday sending a message to his 1.3 million followers suggesting the white house may have manipulated them for political gain. he said unbelievable jobs numbers. these chicago guys will do anything. can't debate, so change numbers. obama administration says it's ludicrous, but he stood by the remarks when he appeared on the kudlow report friday night. >> today the president was out on the stump and he didn't talk
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about 600,000 government workers added in the last two months. the largest number since the study's been done since 1948. he didn't talk about what you just talked about, 600,000 temporary. he talked about 7.8 for ate hours today. okay? 7.8. let's talk about how we get the 7.8. this election is too important to let one number that might be corrected next month determine the drought cooutcome of the el. >> joining us is david sim mons and lena is still with us. either of you got any sympathy with that view? >> not particularly. they're not going to be swayed one way are on yor the other by politics. the two don't always have to move in line with one another.
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so it's a hard art to make that it's been politically manipulated especially when the nonfarm payroll number was not 13 spectacular. >> speaking before those reports, a number of guests thought the unemployment rate might go up because of an increase in the labor force. so how do you explain the move? >> well, you did have a large at of people working part-time for economic reasons, but also a dip in working part-time no noneconomic reasons. and the factor is a job is a job and it means people are work and there is increased demand for labor. and you always have hours worked increased, better in being in monetary wages earned, as well. so for earned income, factors are all positive. >> the unemployment rate has now fallen by half a percentage point in two months. and how close is that to the
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substantial improvement the fed is looking for? >> well, i think three things really we have to consider. first one is the fed like all over data watchers understand the volatility of the figures and the fact that this is just a ratio. it's a ratio and it can get revised from month to month. the second thing to consider is we're in a high political season in the u.s. and i don't think this particular number will detract in the wider intelligent community and financial community will detract from the fact that the u.s. has a big issue with sub trend growth and while the nonfarm payroll figures are consistent more or less with the signals with the trend that we've had this year, which means that perhaps we've seen some stabilization or the end of the deterioration that we observed in recent months, the volatility will not necessarily detract from the fact that the u.s. does have an issue with growth and that the economy -- >> fed clearly targeting
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unemployment. if we continue to get declines in this rate, at some points they have to rethink what they're doing, right? >> the unemployment rate has been droged down by a drop in the occupation rate. so too hard to get excited. it's not a true 7.8. if you have the participation back where we were, then we'd be sitting more around the 12% mark. so they will look through this, but they want to see three to six months of strong gains. they want to see this looking like it will support above trend growth. if you had inflationary pressures, they might be thinking about hiking. but if you have strong job numbers with no in-flaeflationa pressures, they won't hike. >> surely if they're targeting one particular thing and that thing improves a lot, i know -- i'm just saying if this trend continued, they would have to change that view. >> yes, but the household survey
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is incredibly volatile. so not likely to get 873,000 jobs added next month and the month after in the householded survey. if you do, then you would be questioning the methods involved. >> i admit it's highly unlikely. >> if it translates that we get 4% or 5% growth in the fourth quarter, which is incredibly unlikely, people might have to to rethink their argument. but i don't think anyone is falling for that. >> the unemployment figure really, there are a lot of ifs and buts around it. the underrepresents the underemployed and discouraged worker, but also it certainly is not a measure of the very large income inequality that has emerged and that's really what
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the election is being fought over. but let's face it, this is an economy that can just about manage sub trend growth with the help of extraordinary, you know, amount of free credit being created by the federal reserve. i don't think one can underestimate the level support that this liquidity provide address the fact that we've seen some bottoming out in capital markets. but the reality on the ground is very different. this will ultimately decide after the elections. >> how does it impact trading of assets do you think, treasuries? >> i think going into the fourth quarter we'll have treasuries going lower, but that's who are d more due to the fiscal cliff.
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it seems people have dismissed this as a one off, but you have to take encouragement, but you want to see a trend. it's not about one number. one number can't dictate which way we'll go in the longer term. >> all right, lena, we'll let you go before david sticks around. thank you. surprise, surprise, we have a strike in france in centering. trade energy sector to hold 24 hour strike in the energy sector from 19:00. 21:00 cet. coming up next, bae major shareholder throws something in the works. we'll have the details.
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world bank has slashed its growth outlook for china and developing asia. the british chancellor has told cnbc the uk is getting it it right when it comes to tackling debt and will announce more spending cuts within the hour.
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plus the b chlt e aae and eads on on a knife edge. bigger shareholder opposes the deal. and we'll talk about that now. bae biggest shareholder invesco has said it has significant reservations about a tie up with the eads. it cited concerns the merger could backen bae's position in the united states. over the weekend, phillip hammond said it could veto any planned merger. hammond said the uk will block the deal if the french or german governments have too much of a controlling stake in the new firm. joining us for more is patricia in frankfurt. significant really, more likely
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to get done or more likely not? >> at the moment it seems that the stumbling blocks are more than we can do this attitude. that's for sure. what i find is the view from the go. and invesco. of course the whole merger deal is being shepherded towards getting through the regulatory environment, including also what the u.s. has to say once it is presented the shareholder participation especially by the governments from france and from germany. so they are being advised, eads is being advised, bae is being advised on you who it could be presented to the bigger shareholders and also the governments involved. so at the moment i think the talk is very hot. another two days for the first deadline the 10th of october to
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come along, present a merger deal on the day, call it off or just say we do have to establish a new deadline. we had invesco talking about the synergy effects and that bae can stand alone because of the business that they fear may be endangered about there's too much power from governments such as france and germany because they have 40% of the turnover in u.s. business. and of course they don't want to have that jeopardized because a couple of governments wants to have a say in perhaps day to day business. >> all right. we'll see how it pans out. besides that story, if you didn't get your application in, it's too late i'm afraid to become governor of the bank of england. that deadline passed more than two hours or about an hour and a half ago. but we have been asking who you think should be the next governor. tom tweeted in to say assign an
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cowell because he seems to run everything else in the uk. and eliza tweeted says which is the goldman's candidate. jim o'neill has confirmed he has not applied and as well gus o'connell. so the favorites are still you will paul tucker, currently deputy governor, as well as hefd of the german sfa. you can e-mail us worldwide at cnbc.com, tweet us @cnbcwe us @cnbcwex, @rosswestgate. still to come, good news if you're a driver in california. gas drivers are getting the green light on to sell a cheaper type of fuel to help ease the pain of the recent price spike. more about u.s. gasoline when we come back. bob...
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oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. save 50% on banners.
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u.s. futures are indicating for slightly down start. s&p implied five points lower, dow 46 lower, nasdaq down 40. still early day, but reflects the market we have here in europe after relatively healthy
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gains last week of sort of 2% to 3%. european stocks down between-thirds, conta betweentw. more protests expected in athens tomorrow when angela merkel arrives for her first visit to greece in three years. eurozone finance ministers are set to formally launch the 500 million euro bailout fund when they meet today. silvia is there. joins us for more. before this official -- before they sign the budget, how does it play into everything? >> we have a number of things on
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the agenda, not only tomorrow they will talk about the eu budget which of course is the wider budget for the 27, but as we're heading in to fiscal compact and more who are manization, they're getting to the point where it should also talk about national budgets address how they pan out and how that goes in to the next year before we finally head into more budget control or let's say more budget coordination. at the moment everybody talks about it, but we know very well from spain, we know from italy they don't want to give up control of their budgets. so a lot of interesting discussions. but all it that will be overshadowed or oversunshined, whichever way you want to look at it, by the event sm contract that's been signed or rather by the esm being put on track
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today. after that it's ready to go and of it l. after that, what p happens then, will spain apply for some kind of a bailout that isn't quite called a bailout, where they can keep control but still get the money? that's of course the big question. and then will they get it, very likely once they apply it for something, i think it's more are or less a given. and then of course the next interesting step, bond buying. by the esm, by the ecb. so it's more the what comes after what happens today than the actual session today that is markets and for the further development. and of course the question remains to be seen, we have the omt promise, yields are do doing
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okay right now. but that's usually when it starts costing. >> he has the catalonian referendum coming up. meanwhile jerry brown has ordered the state's plugs regulators to let gas stations help sell winter blend fuel to help the spike. it high school $4.66 a gallon on sunday, topping $5 a gallon in some areas. winter blend is cheaper to make. despite the weakness in the global economy, the cost of oil and still rising gasoline prices as evidenced there. what impact is that having? >> unfortunately when gasoline prices rise in the u.s., it end its to eat into real disposable
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income. so less to spend elsewhere. if you look at just the last few months we've had in the third quarter, you saw reasonable growth in july because glen prices didn't change that much. august they stepped up, so relatively flat growth in consumer spending. >> what's the impact of gasoline energy prices? >> we're not really too much effect on the u.s. achievement going forward, but unfortunately, there is obviously the potential that you have to keep your eye on. but outlook is relatively stable energy prices. >> if we get a political blow up, does that feed lieu? >> it's a geopolitical risk, so that's a concern you have to keep an eye on. but that's not really what we're looking for.
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>> final word, how are you assessing the dangers of that, how real is it? >> we have it factored in around 25%. we're looking for changes over four years, rather than hitting at once. if they do hit at once, we'll have a recession. so it comes down to what we can do to avoid it. >> all right. still to come, we'll bring you the latest from caracas. chavez's presidential win there. plus a look ahead to the third quarter earnings season.
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these are the headlines from around the world. slashed outlook for china while warning a major european crisis could bring a lot more pain to the region. george osbourne says the uk is now getting it right when it comes to tackling debt. set to announce as much as another 10 billion pounds in possible welfare spending cuts later. >> we're one of those western countries getting on top of dead
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problems. 10 there is proof there is international confidence in our plan. >> bae bigger shareholder says it would be better left as a is an alone company. and angela merkel visiting greece as finance ministers meet in lex upburg. lux upburg. a warm welcome to you state side. u.s. stocks indicating down at the moment. s&p last week was up just over
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about a%. currently indicating 11 points below fair value. european stocks dragging the indicator down, currently off about half a percent. and after a good week last week, european stocks down between half and about a percent. foot city 100 down three quarters. it was up last week. ibex down just under 1% at the moment. p but bond yields still pretty contains. so what are investors to do at the start of the new trading week? here's some of the thoughts already expressed on cnbc today.
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>> i think the dollar can trade against the euro. you mentioned the australian dollar. that's a little bit more complicated given that the slowdown in asia that we're seeing and in rba that's cutting rates. so it's only right that the aussie dollar is down. >> three point trade on the italian market, so you sell the 2023 paper, buy the 227 and sell the 2029. >> if they leave the euro, they have down side. my view now is that given the omts and what we're seeing, they're a buy. >> plenty more of course coming up throughout the day. meanwhile in britain, the chance
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lore george osbourne expected to announce further austerity measures in around 30 minutes. he's presenting his plan at the conservative party conference in birming hachl. beccy meehan has been there and she caught up with the chancellor and asked him if more austerity would impress the financial markets. >> they'll see a country tackling it problems head on. we're one of those western countries getting on top of our debt problems. we have a plan delivering very low interest rates for us at the market. so that is the proof that there is international confidence in our plan. but i'm saying we have to stick with the plan and i'm setting out new measures and new ideas for example in our welfare system and entitlements to make sure that this country continues to live within its means and at the same time has a tax system that attracts international businesses to britain. 20 of the world's largest
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companies are moving to the uk. all western countries are facing the issue of how they'll pay their way in the world and how they'll grow. it if you look at the uk, we've put a million jobs in the private sector and we'll go on making reforms to the tax system to come and invest. meanwhile, if you didn't apply, it's too late. applications for the top job at the bank of england have officially closed. the first time they openly advertised the vacancy for position of governor. mervyn king will step down next summer. two most likely candidates are adair turner and paul tucker. tucker is arguably the most
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experienced, about but how damaged was he by the libor rate scandal. a third candidate has ruled himself out, fwus o gus o'donne. over the weekend he said he has other priorities to focus on, but he says it's important whoever is appointed is able to work well with the chancellor and treasury. this final decision will be made by the prime minister and the chancellor. jim o'neill has also not put in an application either. so we've been ask who do you think should be the next governor in if you want to joins conversation, worldwide at cnbc.com. we'll continue the conversation in a few moments.
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world bank has slashed its outlook. george osbourne says britain is getting it right when it comes to tackling debt.
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he's due to announce more spending cuts. plus the bae and eads merger on a knife edge. big ir shagest shareholder oppo deal. u.s. markets opposed to open lower. as far as european stocks are concerned respect between gains last week. some of that being eradicated by the falls that we have this morning. ex-take t although bond yields still looking sustainable as far as the spanish government is concerned. yields are lower this morning. indications, reports that u.s.
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investors have baeen buying int the market. they want to wait at least until we get this referendum in catalonia, which is a big region of spain. and they'll feel at the moment as people are buying their auctions that they can keep going for quite a bit longer. how long of course remains to be seen. meanwhile u.s. earnings season beginses in earnest. alcoa reporting third quarter results after the close tomorrow. earnings may not be that great. s&p 500 pre-kicks will drop 2.6% which would snap 11 straight quarters of gains. of the companies that have issued third quarter guidance so far, 78% have warned. and that is the highest negative rate outlook.
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mitt romney set to deliver what his campaign is calling a major foreign policy speech today. it's at 11:20 eastern. he's expected to say that the u.s. sha change course in the middle east and proposing washington help arm the rebels in syria. place conditions on aid to egypt as well as tightening sanctions on iran. president obama's campaign is dismissing the speech calling it one of several attempts by romney to explain his global intentions. and u.s. congressional committee set to recommend blocking china's big telecom equipment makers from expanding at american markets. leaked draft report says zte cannot be trusted to be free from beijing's influences and pose security risks. the news has sent shares of zte tumbling. still to come, it's that
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time of year. earnings season kicks off tomorrow. we'll discuss what to expect. and plus recap the venezuela elections. copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners.
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overmany discounts to thine customers! safe driver, multi-car, paid in full -- a most fulsome bounty indeed, lord jamie. thou cometh and we thy saveth! what are you doing? we doth offer so many discounts, we have some to spare. oh, you have any of those homeowners' discounts? here we go. thank you. he took my shield, my lady. these are troubling times in the kingdom. more discounts than we knoweth what to do with. now, that's progressive.
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angela merkel fly to go athens tomorrow. interesting to see the reception that he's going to on get there. a german government spokesman is saying we want to help greece stay in the eurozone, although they must fulfill the obligations. and they'll discuss the state of greek reforms. so sort of reiteration of the german starts. likely to stay, but you need to do your bit. chavez has been reelected in the closest race of his time in
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office. he won by a 54%-45% margin. kerry sanders has file this had report for us. >> reporter: the streets are filled with those celebrating the success of chavez's unprecedented third victory as president in this country. very strong message say those here that tell continue socialism to make profits especially for the poor and throughout latin america. there are those who lost tonight, those who assumed the opposition who say that they now fear that there is no future for this country and they plan to leave venezuela. likely destination, the united states. but for those here tonight, they
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say the future is with him and they anticipate nothing but good. kerry sanders, nbc news. there's been big gains in debt. we'll see if that gets unwound this morning because there had been a view of regime change. so we'll keep our eyes on that. meanwhile hundreds of thousands of anti-austerity row test tors have taken to the streets of spain once again. unless there is a referendum, they will call a nationwide strike in november. and more protests expected in athens tomorrow. merkel arriving for her first visit in three years. it comes after another weekend of failed talks between the troica and greek government on cuts. speaking to german television over the weekend, germany's
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finance minister schaeuble insisted the chancellor's visit was into the sure sign that athens would receive aid. and here in the uk, lloyds banking group is in disagreement with the country's pnks watch dog over dividend payments to shareholders. claiming the bank is in favor of paying a dividend in 2014, although the paper reports that the financial services authority believes the bank should shore up capital to protect against the fallout of a eurozone breakup. and in other corporate news here, novartis ceo says the firm is keying to maintain its dividend and that big deals are unlikely. in an interview, he says mega takeovers were off the table, but medium sized m&a will continue in an effort to try to boost growth. he added currently effects and the strength of the swiss franc could also hit earnings by 3% to 4% in the fourth quarter.
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so if you have just joined us, and you are pea european stocks are slightly weaker. this is where we stand. this follows gains for most of those markets last week. and u.s. futures right now also indicated lower, as well. down 45 points for the dow jones. nasdaq currently called down 12 points lower. and the s&p 500 around 4.8 points lower. >> yes, earnings season kicks off this week. alcoa reports it third quarter results after the close tomorrow. mike gurhka joins us from the cme. we're between the employment report on friday and earnings starting tomorrow. how do you see it shaping up?
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>> i'm not surprised that we're getting a bearish tone considering the way that almost all markets are really looking as though there is profit taking and worry to start the week. this is whereby the end of the year we're starting to realize maybe that some of the up side profit projections and/or earnings numbers that have been looked for for some of the key companies out there right now are starting to level off a little. for that reason this bearish tone is not surprising. the question is can we hold this or is this a fundamental shift. and right now technically it seems that we're breaking down and i think we could get that con fir nation also. >> 78% of s&p companies that have you shalled guidance have warned. highest negative outlook since 2006. so you have to put that in context with the levels we're currently trading on the s&p. >> no question about that.
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it's just bean the flip side recently as least in the last year as we started to see ourselves consistently exceeding these numbers. so i think it's only within the realm that we should start to see some leveling off here. but again, that's still a healthy level for the s&p here around 1450. and even about if we did see somewhat of a correction of even 5%, i think that would probably warrant more buying by some institutions. >> counseling they will true as a moment to step in? >> absolutely. there have been toppy levels and i think history has shown that even with this correlation going back to some of the 2007 levels, that it's only keen in using some of your memory to look to see if value can be kind of k3
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tracted out of a selloff. we're not jumping to any conclusions that the top has been put in. >> it's a government holiday today, but we did see from the jobs report that unemployment rate rattled treasuries and gold, as well. but not much follow-through today. partly because we have a government holiday, as well, but what happens to -- what's going to happen to those two assets? >> it seems to me at least that some of these -- no one here really on the trading side at least believes in a this rate of under 8% is real. i think the break down in mostly the half million added part-time jobs was very troubling.
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so there's a nervousness in the market just economically or more importantly monetarily within the system that shows that it's warranted to be pessimistic. what we're keeping an eye on is the way crude oil is behaving below 89 and if it does start to correct back down to 85 because of demand. and really keeping an eye on the dollar because all of a sudden we're starting to see some of these really healthy highs were put in the euro above 130 and now we see this correction due it to the ecb. if you put those two together, that will clearly be the lead for the work. the market here in the u.s. will take a cue from those levels. but watch crude oil in particular. >> gasoline prices five bucks in parts of california. an automatic choking mechanism. >> it is. and we're starting to see who different dynamics. here in the midwest, we've seen a 50% correction at the pump.
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it's somewhat anarchy out there if it continues to be a problem to get in a region where there's just a lot of traveling with cars. that being said, i think if you start to see crude nestled below 87, there will be a snap back in the market, i think. >> and the latest call on silver, you got it right at the beginning of the summer. have we pulled money off the table? >> absolutely, but long term perspectives here, there's still a lot of belief that you want to keep that trade on. a lot of people technically have been looking at the options market, but as a whole, it's been a nice correction, but without any doubt the long positions still remain in the market. >> what price in the reentry point? >> anything in the mid thirt
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will look enticing, but there are still targets where we look at 38. >> your throat is still a bit croaky. is that still from the diner last weekend, still have that impact? >> we love you and your he is executive assessment of a european come back will never be forgotten on this side. >> good to see you. that's just about it. beer up and runni coming up next, "squawk box." whatever happens, we hope you have a profitable day.
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the word bank says asia's economic growth is slowing to its weakest pace in 11 years. we'll check the markets after the jobs report. now the focus turns to corporate americas a the nation's largest companies get set to roll out quarterly result which is are not expected to be blockbuster. and gas prices are surging in california topping $5 a gallon in some areas. but across the nation prices are holding steady. it is monday, october 8th, 2012. squawk p"squawk box" begins rig. welcome